Iran’s oil customers may have started to drastically wind down purchases of Iranian crude ahead of the U.S. sanctions, with Platts preliminary tanker tracking data showing that in the first half of August, Iran’s exports plunged by 600,000 bpd compared to July loadings, due to plummeting flows to India, Tehran’s second-largest oil customer.
Between August 1 and 16, Iranian oil exports averaged 1.68 million bpd, Platts tracking data showed. This compares to average exports of 2.32 million bpd in the whole month of July, and to 2.10 million bpd in the first 16 days in July, according to S&P Global Platts estimates.
In the first half of August, Iran’s biggest customer, China, scaled back loadings to 615,688 bpd from 722,100 bpd in July. But the second-biggest importer of Iranian oil in the world, India, saw crude flows from Iran plummet to 203,938 bpd in the period August 1-16, compared to 706,452 bpd in July, according to Platts trade flow data.
Demand from Japan remained steady, but South Korea is not importing Iranian condensate for a second consecutive month in August. Demand in Europe was up strongly, especially from Italy, during August 1-16, according to Platts data.
Iran’s oil exports in July were already lower, having dropped by 7 percent to 2.32 million bpd—their lowest level in four months. Analysts expect Iranian exports to drop even more noticeably next month, the rate of decline expected to accelerate as the United States looks to have Iran’s current customers reduce oil imports to ‘zero’. Related: Brazil’s Opposing Energy Views
It has also been reported that Iran has started to offer India cargo insurance and tankers operated by Iranian companies as some Indian insurers have backed out of covering oil cargoes from Iran in the face of the returning U.S. sanctions on Tehran.
India’s imports from Iran could start to slow from August as some big Indian refiners worry that their access to the U.S. financial system could be cut off if they continue to import Iranian oil, prompting them to reduce oil purchases from Tehran.
The U.S. hasn’t been able to persuade China to reduce oil purchases, but Beijing has reportedly agreed not to increase its oil imports from Iran.
Analysts had expected the sanctions on Iran to remove between 500,000 bpd and 1 million bpd from the oil market, with a growing number of experts saying that the loss could be closer to 1 million bpd and above.
By Tsvetana Paraskova for Oilprice.com
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